Making Self-Checkout Work: Learning From Albertsons

By removing more self-service checkout lanes at its stores, Albertsons raises the question of whether self-service is worth the cost – in dollars and in customer service. A look at whether shrink trumps convenience, and if employee interaction leads to improved loyalty and sales.

AP Photo/Rick Bowmer

Here’s a comment you’ll never hear from a cashier as you’re unloading your bananas and frozen pizza: “Unexpected item found in the bagging area.”

It’s a comment I’d prefer to never hear again, as it indicates one of the more frustrating aspects of the self-checkout lane. If I had to put a price on it, I’d say this sort of hang-up could cost a supermarket one bag of groceries. That’s pretty much what I’d be willing to let go of rather than wait to sort out the “unexpected item” mystery.

Yet it is no mystery why so many retailers have adopted self-checkout. Theoretically. It’s faster, requires fewer workers (or frees existing workers to do other tasks) and, in the long run, saves money.

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But does it save money? And is it good customer service? Albertsons recently raised these questions with the announcement that it would remove more self-service checkout lanes from its stores, a strategy it launched several years ago.

Albertsons has said, since it first began eliminating self-checkout lanes in 2011, that it wanted to encourage more human contact with its employees. But the service question is hard to answer without first examining the cost question; one brings the other into play. So let’s examine both, starting with the perceived cost savings of self-checkout.

4% Shrinkage

A key concern about self-checkout is that it allows for a higher degree of theft. One recent study indicates not only this, but also that self-checkout may encourage theft.

The international study examined 12 million shopping trips over two years. Of them, 1 million trips were audited, accounting for 6 million items, according to The New York Times. The study found that 850,000 of those items had never been scanned, accounting for 4% of the total value of merchandise.

With traditional supermarkets recording an average profit margin of 1% to 2%, that 4% in sales shrink, or loss, can easily offset any gains made by freeing up workers.

What’s less clear is whether these items were intentionally not scanned. A separate report cited on the online news site Vocativ quotes a UK survey from 2014 that reveals nearly 20% of shoppers said they stole items at self-checkout. However, roughly 60% of these said they did it because they couldn’t get an item to scan.

“It’s possible a lot of customers are lifting out of sheer frustration,” stated Vocativ. “And sneaking an item into your bag rather than waiting for the bleep of recognition from the scanner means, if nothing else, that you’ll get out of there and on with your life.”

All of which points to a need for better service, either within the self-checkout lanes or through speedier traditional checkout areas.

Beep With A Smile

Albertsons chose to pull its self-checkout lanes in 2011 to encourage more rapport between customers and employees.

“We just want the opportunity to talk to customers more,” Albertsons spokeswoman Christine Wilcox said at the time. “That’s the driving motivation.”

Albertsons is not alone. CVS Health, Ikea and Big Y Foods have also removed self-checkout terminals due to customer service and other concerns, reports CardFellow.com. According to a survey by NCR Corp., which supplies many of these terminals, 43% of consumers who used self-checkout lanes still wanted an attendant to be available to help resolve issues.

And for good reason. While roughly 75% of surveyed shoppers deemed self-checkout lanes as a time saver, according to Consumer Reports, the experience brings its irritations. Among them: 30% of survey respondents complained the systems did not work properly; 27% got peeved because the shopper ahead of him or her took too long.

Then there is the real threat of lost loyalty. Reduced interactions with a store employee could easily result in an eroded sense of personal connection with the retailer or brand. This gets to emotion. Without it, it’s much easier to move one’s business elsewhere.

But given that shoppers have the choice of self-checkout or a staffed lane, is this a good argument? Some may say yes, when the addition of self-checkouts results in a notable reduction in staffed aisles, essentially forcing shoppers to ring up their own items.

So, as Albertsons and others have chosen, self-checkout has been checked out.

Checking Out, Checking In

But this does not mean self-checkout has been completely rung out. There is plenty of promise in the technology; it’s just a matter of working out the kinks and finessing it.

Among the recommendations are monitors, which make clear to shoppers they are being watched. Self-service aisles with “public-view monitors” positioned at eye-level or above the machines have recorded higher sales, which is evidence of less theft, according to The New York Times.

Other technologies, both old and new, have attempted to take the checkout process away from the checkout aisle. With the recently announced Amazon Go app, for example, users could scan their smartphone upon entering an Amazon convenience store store and then simply pick up what they want and leave. Their purchases are automatically charged to their Amazon accounts. The project is in private beta testing in Seattle and scheduled to open to the public in early 2017.

Self-checkout may transition toward this, or toward a combo pack of smart carts, mobile phones and RFID technology — if retailers can figure out how to reduce the risk of shrink at a reasonable cost and in a way that engages the consumer meaningfully. They might be able to do this with extra discounts, extra value in the form of loyalty points, or just plain efficiency.

In the meantime, I honestly think the single best approach for a retailer is to add a human touch to the technology. Train employees to well understand the system, and its foibles, and position workers at both ends of the stations; enough to handily resolve potential problems. Importantly, these workers should clearly look like they are there to help, not to catch thieves.

This way, when a shopper learns an unexpected item has been found in the bagging area, a nearby employee can locate and pull the stray banana away. Maybe they can even have a good laugh about it.

This article originally appeared on Forbes.com, where Bryan serves as a retail contributor. You can view the original story here.

With more than two decades experience developing meaningful customer relationships for some of the world's leading companies, Bryan Pearson is an internationally recognized authority on enterprise loyalty and coalition marketing. Bryan is author of the bestselling book The Loyalty Leap: Turning Customer Information into Customer Intimacy and President of LoyaltyOne, where he heads six global enterprises, leveraging the knowledge of 120 million customer relationships to create relevant communications and enhanced shopper experiences.

4 COMMENTS

I personally hate the self service check out rows at the super market as well. That is resolved in many Dutch supermarkets by allowing customers to pick up their own scanner (after being recognized with their loyalty card) and scan whilst being in store. Allowing to pack everything directly in their bags or crates. They are then allowed to pay at a self service row where the scanner is returned. Random checks by personnel assure a minimum of theft, there is always the risk of the check. I love this way of self service, my biggest frustration in doing the groceries is always the immense queue at the cashier, I can now overcome that. On top of that: the kids love to scan the items in store! Shopping with kids was never as much fun as it is in this way!

I’d like self checkout a lot more if there was someone standing right there who was eager to assist as soon as something went wrong. That should severely cut down on shrinkage too. You could get one person to monitor 2-4 lanes, they’d just need to be a quality person.

When gas stations moved to self-service many years ago I was very happy. When banks implemented ATMs in the branch I was very happy. But when my local supermarket introduced self-checkout I was saddened.

The reason I felt sad is the store only hired checkout clerks who had some kind of disability. They all did their job well, had a very positive attitude, were helpful and caring, and made me feel like I was contributing to the improvement of these employees lives and well-being.

I would be even happier if the remaining self-checkout lanes were replaced with some of their friends. Even if the chain raised prices to cover the extra costs.

Retail self-checkout is a little like the famous Pogo Possum saying: “We have met the enemy and he is us.” Retailers are strongly motivated to cut costs. Fair enough. However, they often substantially under utilize the relationship, and value-building, abilities of store employees. This is at least as true at checkout as any other part of the store.

Checkout clerks often look bored and disinterested, saying things like “My shift is over in 33 minutes. I can’t wait to get out of here and go home.” Not much customer connection in evidence. It could be so much different, and so much better – for the employee, for the customer, and for the company. At minimum, adding a positive, reinforcing human touch to technology is a place to start if self-checkout is applied.

In a customer advocacy/employee ambassadorship study conducted for an upscale Midwest supermarket chain a few years ago, one of our key research findings was the tremendous opportunity represented by more positive customer interaction in the checkout lane, so long as speed and bill accuracy weren’t negatively impacted. The chain had considered self-checkout, but shelved the plans based on the significantly stronger revenue potential represented by employee ambassadorship training and checkout process enhancement.

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